Behavioral health needs among children and youth have been rising for over a decade. As of 2021, nearly one-third of children ages 3-17 enrolled in Medicaid or CHIP reported having mental, emotional, developmental, and/or behavioral needs, and about half of all children with a behavioral health diagnosis do not receive necessary treatment or services. Given these gaps, states are prioritizing children’s behavioral health and increasingly implementing policies to strengthen access to behavioral health services. This includes policies to support outpatient behavioral health therapy and counseling, a key component of comprehensive children’s behavioral health systems.
Medicaid is the primary payer of behavioral health services for children and youth. While therapy is well-documented in its effectiveness for children with behavioral health needs, states differ in how they cover behavioral health therapy and how children and youth can access these services.
Key Takeaways
- Nearly two-thirds (31) of all states cover behavioral health therapy for children and youth, regardless of whether they have a diagnosed behavioral disorder, through at least one benefit.
- At least 20 states allow providers to bill for therapy provided to children and youth using diagnostic codes that indicate symptoms (R-codes) and/or factors influencing their health (Z-codes).
- Over half (28) of all states do not require prior authorization or have a “soft limit” on the amount, duration, or scope of behavioral health therapy a child can access before prior authorization or further medical necessity review is required.
NASHP analyzed state Medicaid coverage of behavioral health services in all 50 states and the District of Columbia based on states’ coverage of procedure codes, beneficiary eligibility and medical necessity criteria (e.g., age, diagnosis, etc.), and service limits and prior authorization policiesi. Additional detail is available in this chart.
Diagnostic Criteria for Children and Youth to Access Covered Behavioral Health Therapy
Under the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit, Medicaid-eligible children and youth are entitled to coverage of all medically necessary services to correct and ameliorate health conditions. However, states vary in their definitions of medical necessity under EPSDT and their eligibility criteria for children and youth to access behavioral health services. Historically, most states have required a diagnosed behavioral disorder for therapy to be covered. But diagnosing behavioral disorders among children can be challenging given children’s developmental trajectory and other factors such as provider capacity and training. Relatedly, children may exhibit symptoms that would benefit from therapy but do not meet all criteria for a disorder. As a result, children and their families may face delays in diagnosis and subsequent treatment.
Intervening early to address children’s behavioral health needs supports children’s health and development, can mitigate the impact of a condition or symptoms, and helps prevent the need for more intensive and costly services. Given these considerations, states are increasingly adjusting eligibility and medical necessity criteria to cover services for children who do not have a diagnosed disorder, allowing children and youth to more easily access therapy and counseling services.
- Nearly two-thirds of states (31) cover therapy for children and youth regardless of a diagnosed behavioral disorder through at least one benefit. In these states, children who would benefit from behavioral health services but do not have a diagnosed disorder can access covered therapy. Among these states:
- Approximately one-third of states (17) cover therapy without a diagnosed disorder specifically for children and youth. For example, in 2023, Colorado enacted a state law requiring the state Medicaid agency to cover 18 specific behavioral health treatment services, including psychotherapy and behavioral health counseling, for children and youth under age 21 who do not have a diagnosis.
- Some states (12) do not require a diagnosed disorder but do require that a child have symptoms or meet one or more criteria indicating they are at risk of a behavioral disorder. For example, in Illinois, therapy is covered for children and youth under age 21 without a diagnosis as long as they demonstrate a clinical need, based on meeting one or more documented criterion for a mental disorder with a documented impact on their functioning in more than one life domain (e.g., family functioning, social functioning, etc.). In Massachusetts, children and youth are eligible for therapy as long as they have a positive behavioral health screen and services are recommended by a physician or other licensed practitioner within their scope of practice. The screening tool must be age-appropriate and on the state Medicaid agency’s list of approved tools in the Medicaid provider manual.
- Some states (7) cover a limited amount of therapy before a diagnosis is required. The number of service units these states cover before a diagnosis is required ranges from 6 to 20 therapy sessions. For example, in Nevada, children and youth without a diagnosed disorder are eligible for up to 10 sessions of individual, family, and group therapy per calendar year. For additional services, prior authorization and a diagnosed disorder is required.
See Table 1 in the Appendix for additional detail.
Assessment and Diagnostic Coding for Children and Youth
States can encourage or require providers to use diagnostic and eligibility assessments designed for children. Most states follow the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM-5) for assessing and diagnosing mental disorders, which correspond with ICD diagnosis codes. While NASHP did not collect this information for all states, several states (CA, ME, MD, and WA) noted their use of the DC: 0-5 Diagnostic Classification of Mental Health and Developmental Disorders in Infancy and Early Childhood to better assess and diagnose behavioral disorders in young children up to age 6. Several states have developed crosswalks between the DC: 0-5, DSM-5, and the ICD to support provider billing for services provided to children and youth. Three states (DE, NV, WV) also noted the use of assessment tools designed for children, such as the Child and Adolescent Service Intensity Instrument (CASII), to assess for service eligibility.
States Use Different Billing Approaches to Cover Behavioral Health Therapy for Children and Youth
When submitting a Medicaid claim, providers are generally required to include a procedure code and a diagnostic code to indicate the diagnosis that justifies medical necessity for the procedure.ii While all state Medicaid agencies indicate the procedure codes they cover through the state’s fee schedule, states vary in the guidance they give providers regarding eligible diagnostic codes. Some states provide general guidance about diagnostic requirements without specifying the applicable diagnostic codes. Other states specify which diagnostic codes meet medical necessity requirements for a claim to be approved, which can provide clarity for providers and support the billing process.iii
Most states allow providers to bill Medicaid using some common procedure and diagnostic codes for behavioral health therapy. However, some states cover a wider range of procedure and/or diagnostic codes, thereby allowing providers more flexibility to meet the unique behavioral health needs of children and their families.
- Nearly half of all states (20) allow providers to bill for therapy provided to children and youth using diagnostic codes that indicate symptoms and/or factors influencing their health (i.e., “Z-codes” and “R-codes”). These codes are typically used when a child does not have a specified behavioral disorder and/or to indicate the preventive nature of the service. In states that allow the use of these diagnostic codes, providers have more flexibility to deliver therapy to children and youth who would benefit from the service but who do not have a diagnosed disorder. For example, in North Carolina, providers can use Z-codes as a primary diagnosis code for therapy when medically necessary for children and youth up to age 21 without a diagnosed behavioral disorder for up to six visits.
- All 50 states and Washington, DC, cover individual, family, and group therapy procedure codes. Most states cover additional therapy procedure codes (e.g., multiple-family group therapy). All states cover family psychotherapy when the service includes the Medicaid-enrolled individual. Most states (48) also cover family psychotherapy when the individual is not present for the service (e.g., therapy delivered to a child’s caregivers to support the child’s treatment). Most states (38) also cover multiple-family group psychotherapy, psychotherapy when an individual is experiencing a crisis (37 states), and individual psychotherapy as an add-on to an evaluation and management service, such as an outpatient visit or consultation (39 states). Some states also cover psychoanalysis (14 states) and behavioral health therapy/counseling (21 states).
See Table 2 in the Appendix for additional detail.
States Vary in the Limits They Place on Coverage of Behavioral Health Therapy for Children and Youth
Under the EPSDT benefit, children and youth under age 21 are entitled to all medically necessary services to correct or ameliorate a condition. States can manage service utilization among children and youth by placing “soft limits” on the amount, duration, or scope of services a child can access before prior authorization or medical necessity review is required. States carefully balance these utilization management approaches with ensuring access to needed services and preventing delayed or missed care. States vary in their use of soft limits and prior authorization for behavioral health therapy for children and youth.
- Over half of all states (28) do not have specific limits on the amount, duration, or scope of therapy services beyond the requirement to meet medical necessity. Children and youth in these states may face fewer barriers to accessing behavioral health therapy covered by Medicaid, compared to children in states that have soft limits.
- Nearly half of all states (23) require prior authorization or have a soft limit on therapy for children and youth for at least one benefit or service type (e.g., individual therapy, family therapy, etc.). Among these states:
- Five states require prior authorization for children and youth to access any therapy services. Two of these states’ prior authorization requirements are limited to certain populations or providers. In Arkansas, the requirement only applies to services for children under age four. In Connecticut, the requirement only applies to certain providers, such as medical clinics.
- Thirteen states limit therapy to one or more service units per day or per week.
- Fifteen states have a soft limit on the amount of covered therapy per year. The maximum number of service hours/units covered varies widely and differs in some states across individual, family, and group therapy. These maximums range from:
- 12 to 260 units/hours per year for individual or combined therapy;
- 12 to 24 units/hours per year for family therapy; and
- 14 to 135 units/hours per year for group therapy.
See Table 3 in the Appendix for additional detail.
Conclusion
Behavioral health therapy is a critical service for children and youth as part of comprehensive programs, services and supports to address children’s behavioral health. To increase children’s access to these services, states are increasingly optimizing coverage and eligibility criteria under Medicaid. NASHP will continue to track state approaches in this area as part of its work on children’s behavioral health.
Appendix
Table 1: State Eligibility Requirements for Coverage of Psychotherapy/Counselingiv
Table 2: State Coverage of Procedure and Diagnostic Codes for Behavioral Health Therapy for Children and Youth
Table 3: States Limits on Coverage of Behavioral Health Therapy for Children and Youth
Notes
i States use various procedure codes to cover behavioral health therapy. This review focused on state coverage of the following twelve commonly used codes from the Healthcare Common Procedure Coding System (HCPCS)/ Current Procedural Terminology (CPT) for psychotherapy and behavioral health counseling: 90832-90837 (psychotherapy, including with evaluation/management), 90846-90847 (family psychotherapy), 90849 (multiple-family group psychotherapy), 90853 (group psychotherapy), 90845 (psychoanalysis), 90839-90840 (crisis psychotherapy), and H0004 (behavioral health counseling and therapy).
ii The Healthcare Common Procedure Coding System (HCPCS)/Current Procedural Terminology (CPT) system is used for procedure codes, and the International Classification of Diseases (ICD) is used for diagnostic codes.
iii This analysis is based on state Medicaid agency guidance regarding procedure and diagnostic codes. In states with Medicaid managed care delivery systems, covered procedure and diagnostic codes may vary across managed care organizations.
iv In nine states, criteria for coverage of therapy through at least one benefit is unspecified. These states cite that eligibility for coverage of behavioral health therapy is based on medical necessity and/or determined by the provider.
v States may be indicated in multiple sub-categories due to different limits for individual, group, and/or family therapy.
Acknowledgments
Several NASHP staff contributed to this brief through input, guidance, and draft review, including Karen VanLandeghem and Heather Smith. NASHP wishes to thank the state officials who reviewed information NASHP gathered, as well as officials at the Health Resources and Services Administration for their review.
This resource is supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under the National Organizations of State and Local Officials as part of a three-year award. The information, content, and conclusions are those of the author(s) and do not necessarily represent the official views of, nor are an endorsement, by HRSA, HHS, or the U.S. government. For more information, please visit www.HRSA.gov.
